UK seeking £50 billion infrastructure boost - report

LONDON Sun Nov 13, 2011 9:44pm GMT

The sun rises behind the Canary Wharf business district in London September 30, 2011. REUTERS/Paul Hackett

The sun rises behind the Canary Wharf business district in London September 30, 2011.

Credit: Reuters/Paul Hackett

Related Topics

LONDON (Reuters) - Ministers are drawing up plans for a 50-billion-pound housing and road-building programme harnessing private sector money, a newspaper reported on Sunday.

The Sunday Times said the scheme would be the centrepiece of a growth strategy that the government will unveil alongside its autumn financial statement on November 29.

Spokesmen for the Treasury and the Department for Business, the two ministries working on the plans, declined comment.

With the euro zone debt crisis further clouding prospects for Britain's economy, chancellor George Osborne is under intense political pressure to find ways of spurring growth.

But he insists he will not deviate from his plans to cut Britain's swollen budget deficit, saying to do so would be to risk the country's hard-won credibility with the markets.

Osborne confirmed on Sunday the broad outlines of what the government was looking at, but did not give any figures.

"There are huge amounts of money going into infrastructure across the United Kingdom," he told the BBC.

"I fully accept we need to go further. We need to have more initiatives and more government plans to help stimulate housing, get homes being built, help construction, help with more infrastructure, help small business get credit," he said.

"I accept all of that and we are going to announce plans for all those things in the coming weeks," he added.

Government sources said a key part of the government's growth review would be promoting investment in infrastructure but they would not confirm the 50 billion pound figure.

"It won't change deficit reduction plans or spending plans," a Treasury source said.

The Sunday Times said Osborne wants private sector money held by pension fund managers and insurance companies to fund the infrastructure programme to boost the recovery.

His plan is designed to prompt a surge of housebuilding and public sector construction projects, including power stations, social housing, super-fast broadband and toll roads, it said.

These would be on top of 40 infrastructure projects already in the pipeline, including rail, road and national electricity grid improvements, which the government plans to speed up.

The government hopes private investors, frustrated by low returns from government bonds, will invest in the schemes, the report said.

It said the government was discussing how to create an investment vehicle for private cash that did not undermine Britain's top-notch credit rating or increase government borrowing.

The Labour Party has called on the government to act to spur growth, saying it has moved too quickly to cut the deficit, snuffing out a nascent economic recovery.

(Reporting by Adrian Croft; Editing by Louise Ireland)

FILED UNDER: